Come the end of this month, we'll be able to see YPB's Quarterly 4C statement for how they went in this June quarter. It will be interesting for what I believe it will tell us.
I am betting that it will be another sub $100k revenue result for the quarter, and cash burn of around $700k.
With costs running at between 8-10 times its revenue, YPB's cash in bank and cash equivalents is the thing to watch.
I would want to see that the $1.1m 2nd stage of the recent CR has found its way into YPB.s bank account as without it, YPB will run out of cash early in this September quarter. Even then, all of the $2m CR will be gone by the end of this year based on a quarterly cash burn of $700k
The $2m CR on the back of the pull-tab lottery and NVISO announcements used to 'pump up' YPB's share price is going to hurt all shareholders. The so called 'professional and sophisticated investors' (including JH committing to $500k of the CR) are paying 0.444c per share and that is almost a 50% premium on YPB's current share price. Whilst it is a small it is sweet justice for all shareholders who have been stripped of their cash from the many CRs in the past, and the 25;1 share consolidation, it is good to see JH being caught by his own manipulations. Expressed another way, JH's $500k share purchase 'investment' is now worth half of that amount and it didn't take long for that to happen. Same applies to the investors who put in the other $1.5m. Out of that, there will be forever distrust of JH, YPB and EverBlu Capital if they ever go to the market for another CR.
Further, the $2m CR which involves a 450m new share issue more than doubles the number of YPB shares on issue before the CR (416m + 450m = 866m) meaning a massive share dilution and good reason to predict that YPB's share price will fall to below 0.2c in the near future.
As to how the JHH $1m loan repayment is handled (which must be sorted out before October 3, 2023) is also going to be a major issue in coming months. YPB doesn't have the cash reserves to pay out the loan. This debt now running at more than $1.15m (due to capitalising of the interest and establishment charges) could be swapped for equity, or YPB rolling over the debt into a new Convertible Note issue with JHH's interests again secured by a charge over YPB's assets. I don't think YPB's share price can stand the hit of an additional 575m share issue which would be the case if they swapped out the $1.150 debt for equity based on a 0.2c price per share, so they will get out of this mess by rolling over the debt.
At least some comfort can be drawn from the fact that JH has had to put up $500k to buy YPB shares at 0.444c each to get the recent CR across the line. It means he has 'skin in the game' and anything from now on which causes the share price to drop affects his own investment in YPB. It also means that JH action to initiate a VA will result in any and all shares he and his controlled companies hold become worthless. That will, of course, depend on how much the VA Administrator can get for YPB based on its value to any party wanting YPB for its accumulated losses. but in such an outcome it would be highly probable that nothing will be left over for distribution to shareholders. I don't think anyone would buy the company as a going concern given that YPB hasn't made a profit in any quarter of any year in the 9 years it has been listed on the ASX.
It has always been clear to me that JH has not acted in the interest of YPB's stakeholders/shareholders as evidenced by the over the top interest charges on the $1m loan made to YPB, secured by a charge against its assets. The monthly interest charges and the $20k loan establishment fee is costing YPB more than $14k per month (when sales are less than $30 per month), all of this going to the Chairman/CEO when he already is drawing a remuneration package of $460k per year.
YPB is a badly run company where costs continue to run at 8 to 10 times its revenue. YPB is in a precarious cash flow position even when YPB had $2.149m in cash equivalents at the start of June 2023 quarter.The $2m raised in the CR will be all gone by the end of this year and prospects of doing another successful CR look bleak. Neither the pull-tab or NVISO actions are going to be cash flow positive this year, or next year, if at all, whilst their traditional core authentication and brand connect business is going backwards.
YPB's business is useless, it will have little credibility to do another CR, and if VA is initiated, everyone's shares in YPB will be worthless.
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